CEE MARKETS-Forint touches new 2017 low after Nov inflation data

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BUDAPEST, Dec 8 (Reuters) - Hungary's forint touched its lowest
level for the year on Friday after November inflation data signalled no imminent
change to maintaining the central bank's ultra-loose monetary policy stance.
At 0918 GMT, the forint was a touch weaker on the day, rebounding from a
2017 low of 315.18 versus the euro.
Hovering around the key 315 line, the forint has extended its losses for the
year and is underperforming both the Polish zloty and the Czech crown
.
Analysts said a monetary policy divergence between Hungary's central bank,
one of the most dovish in the world, and its more hawkish peers, such as the
Czech or the Polish central bank would be among the main market themes of the
coming year.
Last month Hungary's central bank announced new monetary easing measures to
take effect next year to push yields lower on longer-dated government bonds and
to encourage borrowers to choose fixed-rate housing loans.
"There is no serious resistance in sight for the forint until the 315.5
technical level, therefore, the weakness of the forint seen in the past nearly
two weeks can continue," analysts at local borkerage Erste Investment
said in a note.
The analysts said Friday's data, which showed November inflation at an
annual 2.5 percent, in line with expectations, signalled that the central bank
would not need to adjust its dovish policy stance for the time being.
The zloty gained 0.16 percent in early trade, while the crown was a touch
weaker. Even so, both currencies have posted gains of about five percent so far
this year, eclipsing most other peers in the region.
Central Europe's robust and stable economic growth is expected to boost the
crown, zloty and forint next year, with the former two also getting help from
likely monetary tightening, a Reuters poll found.
The forint is also expected to regain some of the ground it lost this year,
even though the Hungarian central bank is not expected to start to tighten
monetary policy in contrast to peers elsewhere in central Europe.
"Given that we do not expect a sustained breach of the central bank's 3
percent (inflation) target for a long time, we do not forecast monetary
tightening," analysts at CIB Bank said in a note.
"The loose monetary policy of the ECB also bolsters the maintenance of the
local monetary policy room for manoeuvre."
Main stock markets across the region posted modest gains, with Warsaw's
blue-chip index rising 0.9 percent.
CEE MARKETS SNAPSHOT AT 1018 CET
CURRENCIES
Latest Previous Daily Change
bid close change in 2017
Czech crown 25.5700 25.5630 -0.03% 5.62%
Hungary forint 315.0500 314.9800 -0.02% -1.98%
Polish zloty 4.2040 4.2108 +0.16% 4.75%
Romanian leu 4.6300 4.6320 +0.04% -2.05%
Croatian kuna 7.5470 7.5450 -0.03% 0.11%
Serbian dinar 119.6500 119.6700 +0.02% 3.09%
Note: daily calculated from previous close at 1800 CET
change
STOCKS
Latest Previous Daily Change
close change in 2017
Prague 1059.13 1055.92 +0.30% +14.92%
Budapest 38394.92 38348.20 +0.12% +19.97%
Warsaw 2414.08 2393.34 +0.87% +23.93%
Bucharest 7672.66 7671.61 +0.01% +8.29%
Ljubljana 781.21 779.11 +0.27% +8.87%
Zagreb 1847.55 1850.00 -0.13% -7.38%
Belgrade 740.35 742.65 -0.31% +3.20%
Sofia 664.18 665.37 -0.18% +13.26%
BONDS
Yield Yield Spread Daily
(bid) change vs Bund change in
Czech Republic spread
2-year 0.073 0 +082bps -2bps
5-year 0.727 -0.033 +110bps -5bps
10-year 1.403 -0.019 +109bps -4bps
Poland
2-year 1.671 0.017 +242bps +0bps
5-year 2.667 0.022 +304bps +1bps
10-year 3.269 0.017 +295bps +0bps
FORWARD RATE AGREEMENT
3x6 6x9 9x12 3M
interbank
Czech Rep 1 1.19 1.31 0
Hungary 0.03 0.135 0.18 0.03
Poland 1.763 1.817 1.919 1.72
Note: FRA quotes are for ask prices
(Reporting by Gergely Szakacs; Editing by Keith Weir)